XCL Ltd.
75,000 Units
Consisting of
$75,000,000 13.50% Senior Secured Notes due May 1, 2004
with
Common Stock Purchase Warrants
PURCHASE AGREEMENT
May 13, 1997
XXXXXXXXX & COMPANY, INC.
Two Houston Center
000 Xxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
XCL Ltd., a Delaware corporation (the "Company"), and
XCL-China Ltd., a British Virgin Islands company ("XCL-
China"), hereby confirm their agreement with you (the
"Initial Purchaser"), as set forth below.
1. The Securities. Subject to the terms and conditions
herein contained, the Company shall issue and sell to the
Initial Purchaser 75,000 units (each a "Unit" and
collectively, the "Units"), each consisting of $1,000
principal amount of its 13.50% Senior Secured Notes due May
1, 2004, Series A (the "Senior Notes") and one warrant
(collectively, the "Warrants") to purchase initially 1,280
shares of the Company's common stock, par value $0.01 per
share (the "Common Stock"), at an initial purchase price of
$0.2063 per share. The Senior Notes are to be issued under
an indenture (the "Indenture") to be dated as of the Closing
Date (as defined in Section 3 below) by and between the
Company and Fleet National Bank, as trustee (the "Trustee").
Pursuant to a Cash Collateral and Disbursement Agreement
(the "Disbursement Agreement") to be entered into effective
as of the Closing Date among the Company, the Trustee, Fleet
National Bank, as disbursement agent (the "Disbursement
Agent"), and Xxxxxx X. Xxxxxxxxxxx & Associates, Inc., as
representative for the holders of the Senior Notes (the
"Representative"), the proceeds from the sale of the Units
(including an amount equal to the Initial Purchaser's
discount) will be placed in an account (the "Cash Collateral
Account"), to be held and invested by the Disbursement Agent
in Cash Equivalents (as defined in the Indenture) at the
discretion of the Company. Interest and other income, if
any, earned on the invested proceeds (together with such
Cash Equivalents and proceeds, the "Collateral") will be
added to the balance of the Cash Collateral Account.
Pursuant to the Indenture and the Security Agreement, Pledge
and Financing Statement to be entered into by the Company
and the Trustee effective as of the Closing Date (the
"Security Agreement"), the Company will grant and pledge to
the Trustee, for the equal and ratable benefit of the Senior
Noteholders, a security interest in and first lien on the
Collateral to secure the performance of the obligations of
the Company under the Indenture and the Senior Notes.
Simultaneously with the disbursement of the Collateral to
the Company, and as a condition to such disbursement,
(i) the Company and XCL-China and, under certain
circumstances, certain other subsidiaries of the Company,
will execute and deliver to the Trustee a supplement to the
Indenture pursuant to which XCL-China and any such other
subsidiary (upon execution and delivery of such supplemental
indenture, each being called a "Subsidiary Guarantor") shall
guarantee, on a senior basis, to each Senior Noteholder and
the Trustee, the performance of the Company's obligations
under the Indenture and the Senior Notes (each such
guarantee being called herein a "Guarantee") and (ii) the
Company will execute and deliver to the Trustee a Pledge
Agreement (the "Pledge Agreement", which together with the
Disbursement Agreement and the Security Agreement, as they
may be in effect from time to time, are collectively
referred to hereinafter as the "Security Documents")
pursuant to which the Company will grant and pledge to the
Trustee, for the equal and ratable benefit of the Senior
Noteholders, a security interest in all of the outstanding
capital stock of XCL-China and, under certain circumstances,
other subsidiaries of the Company to secure the performance
of the Company's obligations under the Indenture and the
Senior Notes. The Warrants are to be issued under a warrant
agreement of the Company to be dated as of the Closing Date
(the "Warrant Agreement") for the benefit of the Senior
Noteholders from time to time of the certificates evidencing
the Warrants. The shares of Common Stock issuable upon
exercise of the Warrants are herein referred to as the
"Warrant Shares." The Senior Notes, the Guarantee (when
issued), the Warrants, the Additional Warrants (as defined
in Section 3 below), the Warrant Shares, the Additional
Warrant Shares (as defined in Section 3 below) and the Units
are collectively referred to herein as the "Securities."
The Securities are being offered and sold to the
Initial Purchaser without being registered under the
Securities Act of 1933, as amended (the "Act"), in reliance
on exemptions therefrom.
In connection with the sale of the Securities, the
Company has prepared a preliminary offering memorandum dated
April 28, 1997 (the "Preliminary Memorandum"), and a final
offering memorandum dated May 13, 1997 (the "Final
Memorandum"; the Preliminary Memorandum and the Final
Memorandum each herein being referred to as a "Memorandum"),
setting forth a description of the terms of the Securities
and the Security Documents, the terms of the offering of the
Securities, and a description of the business of the Company
and XCL-China.
The Initial Purchaser and its direct and indirect
transferees of the Securities will be entitled to the
benefits of a registration rights agreement, substantially
in the form attached hereto as Exhibit A (the "Registration
Rights Agreement"), pursuant to which the Company shall
agree, among other things, (i) to file a registration
statement (the "Registration Statement") with the Securities
and Exchange Commission (the "Commission") registering the
Senior Notes or the Exchange Notes (as defined in the
Registration Rights Agreement) under the Act and (ii) to
grant certain "piggy-back" registration rights to the
holders of the Warrant Shares.
2. Representations and Warranties. The Company and XCL-
China, jointly and severally, represent and warrant to and
agree with the Initial Purchaser that:
(a) Neither the Final Memorandum, nor any amendment
or supplement thereto, as of the date thereof and at all
times subsequent thereto up to the Closing Date, contained
or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the
representations and warranties set forth in this Section
2(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to
the Initial Purchaser furnished to the Company or XCL-China
in writing by the Initial Purchaser expressly for use in the
Final Memorandum or any amendment or supplement thereto.
(b) As of the Closing Date, the Company will have
the authorized capitalization set forth in the Final
Memorandum; all of the outstanding shares of capital stock
of the Company and XCL-China have been, and as of the
Closing Date will be, duly authorized and validly issued,
are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights; except as set
forth in the Final Memorandum, all of the outstanding shares
of capital stock of XCL-China are, and as of the Closing
Date will be, owned, directly or indirectly, by the Company,
free and clear of all liens, encumbrances, equities and
claims or restrictions on transferability (other than those
imposed by the Act and the securities or "Blue Sky" laws of
certain jurisdictions) or voting; except as set forth in the
Final Memorandum, there are no outstanding (i) options,
warrants or other rights to purchase from the Company or XCL-
China, (ii) agreements or other obligations of the Company
or XCL-China to issue or (iii) other rights to convert any
obligation into, or exchange any securities for, in the case
of each clause (i) through (iii) shares of capital stock of
the Company or XCL-China. The Company does not have any
Subsidiaries (as defined in the Indenture) except for XCL-
China and the other corporations identified in Exhibit B
hereto; except for the capital stock of the Subsidiaries
identified in Exhibit B hereto and as otherwise disclosed in
the Final Memorandum, the Company does not own, directly or
indirectly, any shares of capital stock or any other equity
or long-term debt securities or have any equity interest in
any firm, partnership, joint venture or other entity.
(c) Each of the Company and its Subsidiaries has
been duly incorporated, is validly existing and is in good
standing as a corporation under the laws of its jurisdiction
of incorporation, with all requisite corporate power and
authority to own its properties and conduct its business as
now conducted, and as described in the Final Memorandum;
each of the Company and its Subsidiaries is duly qualified
to do business as a foreign corporation in good standing in
all other jurisdictions where the ownership or leasing of
its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material
adverse effect on the general affairs, management, business,
condition (financial or otherwise), prospects or results of
operations of the Company and its Subsidiaries, taken as a
whole (any such event, a "Material Adverse Effect").
(d) The Company has all requisite corporate power
and authority to execute, deliver and perform each of its
obligations under the Senior Notes, the Exchange Notes and
the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Senior Notes, the Exchange Notes and
the Private Exchange Notes have each been duly and validly
authorized by the Company and, when executed by the Company
and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Senior
Notes, when delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement,
will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture and the
Intercreditor Agreement (as defined in the Final Memorandum)
and enforceable against the Company in accordance with their
terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter
in effect relating to creditors' rights generally and,
(ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(e) The Company has all requisite corporate power
and authority to execute, deliver and perform each of its
obligations under the Indenture, the Intercreditor Agreement
and the Security Documents. The Indenture meets the
requirements for qualification under the Trust Indenture Act
of 1939, as amended (the "TIA"). The Indenture, the
Intercreditor Agreement and the Security Documents have been
duly and validly authorized by the Company and, when
executed and delivered by the Company (assuming the due
authorization, execution and delivery by each other party
thereto), each will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) general principles of
equity and the discretion of the court before which any
proceeding therefor may be brought and (iii), in the case of
the Security Documents, federal or state securities laws or
principles of public policy affecting enforcement of rights
to indemnity or contribution.
(f) The Company has all requisite corporate power
and authority to execute, deliver and perform its
obligations under the Registration Rights Agreement. The
Registration Rights Agreement has been duly and validly
authorized by the Company and, when executed and delivered
by the Company (assuming the due authorization, execution
and delivery by the Initial Purchaser), will constitute a
valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its
terms, except that (A) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor
may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(g) Subject to the availability of a sufficient
number of authorized but unissued or treasury shares to
permit the exercise of the outstanding Warrants and
Additional Warrants, the Company has all requisite corporate
power and authority to execute, deliver and perform each of
its obligations under the Warrant Agreement. The Warrant
Agreement has been duly and validly authorized by the
Company and, subject to the availability of a sufficient
number of authorized but unissued or treasury shares to
permit the exercise of the outstanding Warrants and
Additional Warrants, when executed and delivered by the
Company, will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) general principles of
equity and the discretion of the court before which any
proceeding therefor may be brought, and (iii) federal or
state securities laws or principles of public policy
affecting enforcement of rights to indemnity or
contribution.
(h) Subject to the availability of a sufficient
number of authorized but unissued or treasury shares to
permit the exercise of the outstanding Warrants and
Additional Warrants, the Company has all requisite corporate
power and authority to execute, deliver and perform each of
its obligations under the Warrants and the Additional
Warrants. The Warrants and the Additional Warrants have
been duly and validly authorized by the Company and, when
executed by the Company and countersigned by the Warrant
Agent in accordance with the provisions of the Warrant
Agreement and when delivered to and paid for (in the case of
the Warrants) by the Initial Purchaser in accordance with
the terms of this Agreement, will have been duly executed,
issued and delivered and, subject to the availability of a
sufficient number of authorized but unissued or treasury
shares to permit the exercise of the outstanding Warrants
and Additional Warrants, will constitute valid and legally
binding obligations of the Company, entitled to the benefits
of the Warrant Agreement and enforceable against the Company
in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) general principles of
equity and the discretion of the court before which any
proceeding therefor may be brought and (iii) federal or
state securities laws or principles of public policy
affecting enforcement of rights to indemnity or
contribution.
(i) The Warrant Shares and the Additional Warrant
Shares, upon becoming available for issuance upon the
exercise of the Warrants and the Additional Warrants in
accordance with their respective terms, will have been duly
and validly authorized for issuance by the Company and, when
issued in accordance with the terms and conditions contained
in the Warrant Agreement upon exercise of the Warrants and
upon exercise of the Additional Warrants, the Warrant Shares
and the Additional Warrant Shares, as the case may be, will
be duly authorized, validly issued, fully paid and non-
assessable and will not be subject to any preemptive or
similar rights. The Warrant Shares and the Additional
Warrant Shares, as the case may be, upon becoming available
for issuance upon the exercise of the Warrants and the
Additional Warrants in accordance with their respective
terms, will have been duly reserved for issuance in
accordance with the terms of the Warrants, the Additional
Warrants and the Warrant Agreement, as the case may be.
(j) The Company and XCL-China have all requisite
corporate power and authority to execute, deliver and
perform each of their obligations under this Agreement and
to consummate the transactions contemplated hereby. This
Agreement has been duly and validly authorized, executed and
delivered by the Company and XCL-China. No consent,
approval, authorization or order of any court or
governmental agency or body, or third party is required for
the performance of this Agreement by the Company or XCL-
China or the consummation by the Company or XCL-China of the
transactions contemplated hereby, except such as have been
(or will be, upon execution and delivery of the
Intercreditor Agreement) obtained and other than such as may
be required under the Act or state securities or "Blue Sky"
laws in connection with the purchase and resale of the
Securities by the Initial Purchaser. Neither the Company
nor XCL-China is (i) in violation of its certificate of
incorporation or bylaws or its Memorandum and Articles of
Association, respectively, (ii) in breach or violation of
any statute (including, without limitation, the Foreign
Corrupt Practices Act), judgment, decree, order, rule or
regulation applicable to either of them or any of their
respective properties or assets, except as disclosed in the
Final Memorandum or except for any such breach or violation
which would not, individually or in the aggregate, have a
Material Adverse Effect, or (iii) except as disclosed in the
Final Memorandum, in breach of or default under (nor has any
event occurred which, with notice or passage of time or
both, would constitute a default under) or in violation of
any of the terms or provisions of any indenture, mortgage,
deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other
agreement or instrument to which either of them is a party
or to which either of them or their respective properties or
assets is subject, except for any such breach, default,
violation or event which would not, individually or in the
aggregate, have a Material Adverse Effect.
(k) The execution, delivery and performance by the
Company and XCL-China of this Agreement and the consummation
by the Company and XCL-China of the transactions
contemplated hereby, and the fulfillment of the terms
hereof, will not conflict with or constitute or result in a
breach of or a default under (or an event which with notice
or passage of time or both would constitute as a default
under) or violation of any of (i) the terms or provisions of
any indenture, mortgage, deed of trust, loan agreement,
note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to
which the Company or XCL-China is a party or to which either
of them or their respective properties or assets is subject,
(ii) the respective certificate of incorporation or bylaws
or Memorandum or Articles of Association of the Company or
XCL-China, as the case may be, or (iii) (assuming compliance
with the Act and all applicable state securities or "Blue
Sky" laws) any statute, judgment, decree, order, rule or
regulation applicable to the Company or XCL-China or any of
their respective properties or assets.
(l) The audited consolidated financial statements
of the Company and its subsidiaries included in the Final
Memorandum present fairly in all material respects the
consolidated financial position, the consolidated results of
their operations and their cash flows at the dates and for
the periods to which they relate and have been prepared in
conformity with generally accepted accounting principles
applied on a consistent basis, except as otherwise stated
therein. The summary and selected consolidated historical
financial data in the Final Memorandum present fairly in all
material respects the financial information shown therein
and have been prepared and compiled on a basis consistent
with the audited financial statements included therein,
except as otherwise stated therein. Xxxxxxx & Xxxxxxx
L.L.P. (the "Independent Accountants") is an independent
public accounting firm within the meaning of the Act and the
rules and regulations promulgated thereunder.
(m) Except as described in the Final Memorandum,
there is not pending or, to the knowledge of the Company or
XCL-China, threatened, any action, suit, proceeding, inquiry
or investigation to which the Company or any Subsidiary is a
party, or to which the property or assets of the Company or
any Subsidiary are subject, before or brought by any court
or governmental agency or body which, if determined
adversely to the Company or such Subsidiary, would have,
individually or in the aggregate, a Material Adverse Effect
or which seeks to restrain, enjoin, prevent the consummation
of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the
other transactions described in the Final Memorandum.
(n) Each of the Company and XCL-China owns or
possesses adequate licenses or other rights to use all
trademarks, service marks, trade names and know-how
necessary to conduct the businesses now or proposed to be
operated by it as described in the Final Memorandum, and
neither the Company nor XCL-China has received any notice of
conflict with (or knows of any such conflict with) asserted
rights of others with respect to any trademarks, service
marks, trade names or know-how which, if such assertion of
conflict were sustained, would, individually or in the
aggregate, have a Material Adverse Effect.
(o) Each of the Company and XCL-China possesses all
licenses, permits, certificates, consents, orders, approvals
and other authorizations from, and has made all declarations
and filings with, all federal, state, local and foreign
governmental authorities with jurisdiction (including,
without limitation, the Ministry of Foreign Trade and
Economic Cooperation of the People's Republic of China
("MOFTEC")), all self-regulatory organizations and all
courts and other tribunals, presently required or necessary
to own or lease, as the case may be, and to operate its
properties and to carry on its business as now or proposed
to be conducted as set forth in the Final Memorandum, except
for MOFTEC's (or any other requisite Chinese governmental
authority's) approval of the ODP (as defined in the
Memorandum) and except where the failure to obtain such
licenses, permits, certificates, consents, orders, approvals
and other authorizations, or to make all declarations and
filings, would not, individually or in the aggregate, have a
Material Adverse Effect, and neither the Company nor XCL-
China has received any notice of any proceeding relating to
revocation or modification of any such license, permit,
certificate, consent, order, approval or other
authorization, except as described in the Final Memorandum
or except where such revocation or modification would not,
individually or in the aggregate, have a Material Adverse
Effect.
(p) Since the respective dates as of which
information is given in the Final Memorandum, except as
described therein and except for the transactions
contemplated hereby, (i) neither the Company nor any
Subsidiary has incurred any liabilities or obligations,
direct or contingent, or entered into or agreed to enter
into any transactions or contracts (written or oral) not in
the ordinary course of business and (ii) neither the Company
nor XCL-China has purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock.
(q) Each of the Company and its Subsidiaries has
filed all necessary federal, state and foreign income and
franchise tax returns, except where the failure to so file
such returns would not, individually or in the aggregate,
have a Material Adverse Effect, and, except as set forth in
the Final Memorandum, has paid all taxes shown as due
thereon; and other than tax deficiencies which the Company
or any Subsidiary is contesting in good faith and for which
the Company or such Subsidiary has provided adequate
reserves, there is no tax deficiency that has been asserted
against the Company or any Subsidiary that would have,
individually or in the aggregate, a Material Adverse Effect.
(r) Subject to the Cautionary Statements (as
defined in the Final Memorandum) and other qualifications
set forth in the Final Memorandum, the projected financial
and operating data included in the Final Memorandum are
based on or derived from sources or assumptions which the
Company and XCL-China believe to be reliable and reasonable.
Subject to the Cautionary Statements and the assumptions and
qualifications set forth in the Gruy Report (as defined in
the Final Memorandum), the projected reserve data included
in the Final Memorandum by incorporation by reference to the
Gruy Report are based on or derived from sources or
assumptions which the Company and XCL-China believe to be
reliable and reasonable.
(s) None of the Company, XCL-China or any agent
acting on their behalf has taken or will take any action
that could cause the transactions contemplated by this
Agreement (including, without limitation, any pledge of the
capital stock of XCL-China pursuant to the Pledge Agreement)
or the sale of the Securities to violate Regulation G, T, U
or X of the Board of Governors of the Federal Reserve
System, in each case as in effect, or as the same may
hereafter be in effect, on the Closing Date.
(t) Each of the Company and XCL-China has good and
defensible title to all real property and good title to all
personal property described in the Final Memorandum as being
owned by it and good and defensible title to a leasehold
estate in the real and personal property described in the
Final Memorandum as being leased by it free and clear of all
liens, charges, encumbrances or restrictions, except as
described in the Final Memorandum or to the extent the
failure to have such title or the existence of such liens,
charges, encumbrances or restrictions would not,
individually or in the aggregate, have a Material Adverse
Effect.
(u) There are no legal or governmental proceedings
involving or affecting the Company or any Subsidiary or any
of their respective properties or assets which would be
required to be described in a prospectus pursuant to the Act
that are not described in the Final Memorandum, nor are
there any material contracts or other documents which would
be required to be described in a prospectus pursuant to the
Act that are not described in the Final Memorandum.
(v) Except as described in the Final Memorandum,
each of the Company and its Subsidiaries is in compliance in
all respects with all existing and applicable domestic and
foreign laws, rules or regulations relating to pollution or
protection of public or employee health or the environment
("Environmental Law") and with the terms and conditions of
any permit, license or approval issued to the Company or its
Subsidiaries thereunder in connection with the ownership,
operation or use of its business, property and assets,
except where the failure to be in such compliance would not,
individually or in the aggregate, have a Material Adverse
Effect; except as disclosed in the Final Memorandum, none of
the Company or its Subsidiaries is subject to any known
liability, absolute or contingent, under any Environmental
Law except for any such liability which would not,
individually or in the aggregate, have a Material Adverse
Effect; except as disclosed in the Final Memorandum, there
is no civil, criminal or administrative action, suit,
demand, hearing, notice of violation or deficiency,
investigation, proceeding or notice of potential
responsibility or demand letter or request for information
pending or, to the knowledge of the Company or XCL-China,
threatened against the Company or any of its Subsidiaries
under any Environmental Law which, if determined adversely
to the Company or any such Subsidiary would, individually or
in the aggregate, result in a Material Adverse Effect.
(w) Except as disclosed in the Final Memorandum,
each of the Company or its Subsidiaries carries insurance
(including self insurance) in such amounts and covering such
risks as in its reasonable determination is adequate for the
conduct of its business and the value of its properties.
(x) None of the Company or its Subsidiaries has any
liability for any prohibited transaction or funding
deficiency or any complete or partial withdrawal liability
with respect to any pension, profit sharing, 401(k) plan or
other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which
the Company or any Subsidiary makes or ever has made a
contribution and in which any employee of the Company or any
Subsidiary is or has ever been a participant. With respect
to such plans, the Company and each Subsidiary is in
compliance in all material respects with all applicable
provisions of ERISA.
(y) After giving effect to the offering and sale of
the Securities, neither the Company nor XCL-China will be an
"investment company" or "promoter" or "principal
underwriter" for an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
(z) The Senior Notes, the Exchange Notes, the
Warrants, the Warrant Shares, the Common Stock, the Units,
the Indenture, the Intercreditor Agreement, the Security
Documents, the Warrant Agreement, the Additional Warrants,
the Additional Warrant Shares and the Registration Rights
Agreement will, and this Agreement does, conform in all
material respects to the descriptions thereof in the Final
Memorandum.
(aa) Except as disclosed in the Final Memorandum,
no holder of securities of the Company or any Subsidiary
will be entitled to have such securities registered under
the registration statements required to be filed by the
Company pursuant to the Registration Rights Agreement other
than as expressly permitted thereby.
(bb) Immediately after the consummation of the
transactions contemplated by this Agreement, the fair value
and current fair saleable value of the assets of the Company
(on a consolidated basis) will exceed the sum of its stated
liabilities and identified contingent liabilities; the
Company (on a consolidated basis) is not, nor will the
Company (on a consolidated basis) be, after giving effect to
the execution, delivery and performance of this Agreement,
and the consummation of the transactions contemplated
hereby, (a) left with unreasonably small capital with which
to carry on its business as it is proposed to be conducted,
(b) unable to pay its debts (contingent or otherwise) as
they mature or (c) otherwise insolvent.
(cc) Neither the Company nor any person acting on
its behalf has offered or sold the Securities by means of
any general solicitation or general advertising within the
meaning of Rule 502(c) under the Act or, with respect to
Securities sold outside the United States to non-U.S.
persons (as defined in Rule 902 under the Act), by means of
any directed selling efforts within the meaning of Rule 902
under the Act, and the Company, any affiliate of the Company
and any person acting on its or their behalf (other than the
Initial Purchaser) have complied with and will implement the
"offering restriction" within the meaning of such Rule 902.
(dd) Except as disclosed in the Final Memorandum,
within the six months preceding the date hereof, neither the
Company nor any other person acting on behalf of the Company
(other than the Initial Purchaser) has offered or sold to
any person any Securities, or any securities of the same or
a similar class as the Securities, other than Securities
offered or sold to the Initial Purchaser hereunder or
securities included in the Concurrent Equity Offering (as
such term is defined in the Memorandum); and the Company
will take reasonable precautions designed to insure that any
offer or sale, direct or indirect, in the United States or
to any U.S. person (as defined in Rule 902 under the Act) of
any Securities or any substantially similar security issued
by the Company, within six months subsequent to the date on
which the distribution of the Securities has been completed
(as notified to the Company by the Initial Purchaser), is
made under restrictions and other circumstances reasonably
designed not to affect the status of the offer and sale of
the Securities in the United States and to U.S. persons
contemplated by this Agreement as transactions exempt from
the registration provisions of the Act;
(ee) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Section
517.075, Florida Statutes.
(ff) Assuming the accuracy of the representations
and warranties of the Initial Purchaser in Section 8 hereof,
it is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchaser in the
manner contemplated by this Agreement to register any of the
Securities under the Act or to qualify the Indenture under
the TIA.
(gg) No securities of the Company or XCL-China are
of the same class (within the meaning of Rule 144A under the
Act) as the Securities and listed on a national securities
exchange registered under Section 6 of the Exchange Act, or
quoted in a U.S. automated inter-dealer quotation system.
(hh) None of the Company or its Subsidiaries has
taken, nor will any of them take, directly or indirectly,
any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the
price of the Securities.
(ii) Upon (i) execution and delivery of (A) the
Security Agreement by the Company and the Trustee and (B)
the Disbursement Agreement by the Company, the Trustee, the
Disbursement Agent and the Representative , (ii) the
delivery to the Disbursement Agent of the Collateral as
provided therein and (iii) the execution and filing of all
appropriate forms as required under the Uniform Commercial
Code, the Security Agreement will create and constitute a
valid and enforceable first priority pledge of and perfected
security interest in the Collateral.
(jj) Neither the Company nor any of its
Subsidiaries is a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a
"holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
Any certificate signed by any officer of the Company or
XCL-China and delivered to the Initial Purchaser or to
counsel for the Initial Purchaser shall be deemed a joint
and several representation and warranty by the Company and
XCL-China to the Initial Purchaser as to the matters covered
thereby.
3. Purchase, Sale and Delivery of the Securities. On
the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to issue and
sell to the Initial Purchaser, and the Initial Purchaser
agrees to purchase from the Company, 75,000 Units at a
purchase price of $960 per Unit plus accrued interest on the
Senior Notes from May 20, 1997, if any. One or more
certificates in definitive form for the Securities that the
Initial Purchaser has agreed to purchase hereunder, and in
such denomination or denominations and registered in such
name or names as the Initial Purchaser requests upon notice
to the Company at least 24 hours prior to the Closing Date,
shall be delivered by or on behalf of the Company to the
Initial Purchaser, against payment by or on behalf of the
Initial Purchaser of the purchase price therefor, plus an
additional amount equal to $3,000,000 (the "Discount"), by
wire transfer (same day funds) to such account or accounts
as the Disbursement Agent shall specify prior to the Closing
Date. Such delivery of and payment for the Securities shall
be made at 10:00 a.m., New York time, on May 20, 1997, or at
such other place, time or date as the Initial Purchaser, on
the one hand, and the Company, on the other hand, may agree
upon, such time and date of delivery against payment being
herein referred to as the "Closing Date." The Company shall
reimburse the Initial Purchaser for making payment of the
Discount to the Disbursement Agent on behalf of the Company
by transferring an equal amount (in same day funds) on the
Closing Date to such account as the Initial Purchaser shall
specify prior to the Closing Date, it being understood that
the Company shall be obligated to make such payment only out
of the proceeds of the Concurrent Equity Offering. The
Company has requested that the Closing Date be scheduled to
occur five business days after the date of this Agreement in
order to provide sufficient time to satisfy the conditions
for closing set forth in Section 7 below. With respect to
Securities to be delivered in definitive certificated form,
the Company will make certificates for such Securities
available for checking and packaging by the Initial
Purchaser at the offices of Xxxxxxxxx & Company, Inc. in New
York, New York, or at such other place as the Initial
Purchaser may designate, at least 24 hours prior to the
Closing Date. Securities to be represented by one or more
definitive global Securities in book-entry form will be
deposited on the Closing Date, by or on behalf of the
Company, with The Depository Trust Company ("DTC") or its
designated custodian, and registered in the name of Cede &
Co.
As additional compensation to the Initial Purchaser,
the Company agrees to issue to (or on the order of) the
Initial Purchaser, pursuant to the Warrant Agreement and at
the Closing Date, for no additional consideration, 15,006
Warrants to purchase initially 19,207,680 shares of Common
Stock at an initial exercise price of $0.2063 per share of
Common Stock (the "Additional Warrants") The shares of
Common Stock issuable upon exercise of the Additional
Warrants are herein referred to as the "Additional Warrant
Shares." Unless otherwise requested by the Initial
Purchaser at least 24 hours prior to the Closing Date, a
single certificate representing 12,755 Additional Warrants
shall be issued in the name of Xxxxxxxxx & Company, Inc. and
a second certificate representing 2,251 Additional Warrants
shall be registered in the name of Xxxxxxx Xxxxxxx.
4. Offering by the Initial Purchaser. The Initial
Purchaser proposes to make an offering of the Securities at
the price and upon the terms set forth in the Final
Memorandum, as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchaser
is advisable.
5. Covenants of the Company and XCL-China. Each of the
Company and XCL-China jointly and severally covenants and
agrees with the Initial Purchaser that:
(a) The Company and XCL-China shall not make any
amendment or supplement to the Final Memorandum of which the
Initial Purchaser shall not previously have been advised and
furnished a copy for a reasonable period of time prior to
the proposed amendment or supplement and as to which the
Initial Purchaser shall not have given its consent. The
Company and XCL-China shall promptly, upon the reasonable
request of the Initial Purchaser, make any amendments or
supplements to the Preliminary Memorandum or the Final
Memorandum that may be necessary or advisable in connection
with the resale of the Securities by the Initial Purchaser.
(b) The Company and XCL-China shall cooperate with
the Initial Purchaser in arranging for the qualification of
the Securities for offering and sale under the securities or
"Blue Sky" laws of such jurisdictions as the Initial
Purchaser may designate and shall continue such
qualifications in effect for as long as may be necessary to
complete the resale of the Securities; provided, however,
that in connection therewith, neither of the Company nor XCL-
China shall be required to qualify as a foreign corporation
or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in excess of a
nominal dollar amount in any such jurisdiction where it is
not then so subject.
(c) If, at any time prior to the completion of the
initial resale by the Initial Purchaser of the Securities to
persons other than affiliates of the Initial Purchaser (as
determined by the Initial Purchaser), any event occurs as a
result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a
material fact, or omit to state a material fact necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading, or
if for any other reason it is necessary at any time to amend
or supplement the Final Memorandum to comply with applicable
law, the Company and XCL-China will promptly notify the
Initial Purchaser thereof and will prepare, at the expense
of the Company and XCL-China, an amendment or supplement to
the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Company will, without charge, provide to
the Initial Purchaser and to counsel for the Initial
Purchaser as many copies of the Final Memorandum or any
amendment or supplement thereto as the Initial Purchaser may
reasonable request.
(e) The Initial Purchaser will deposit the proceeds
from the sale of the Securities with the Disbursement Agent
on the Closing Date, on behalf of the Company, and, upon the
disbursement of such proceeds to the Company pursuant to the
Disbursement Agreement, the Company will apply such proceeds
as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For and during the period ending on the fifth
anniversary of the Closing Date, the Company will furnish to
the Initial Purchaser copies of all reports and other
communications (financial or otherwise) furnished by the
Company or XCL-China to the Trustee, the Disbursement Agent,
the Warrant Agent or the holders of the Securities and, as
soon as available, copies of any reports or financial
statements furnished to or filed by the Company or XCL-China
with the Commission or any national securities exchange on
which any class of securities of the Company or XCL-China
may be listed.
(g) Prior to the Closing Date, the Company will
furnish to the Initial Purchaser, as soon as they have been
prepared, if at all, a copy of any unaudited interim
financial statements of the Company for any period
subsequent to the period covered by the most recent
financial statements appearing in the Final Memorandum.
(h) Except as described in the Final Memorandum,
none of the Company or any of its affiliates will sell,
offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the
Act) which could be integrated with the sale of the
Securities in a manner which would require the registration
under the Act of the Securities.
(i) The Company and XCL-China will not solicit any
offer to buy or offer to sell the Securities by means of any
form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) or in
any manner involving a public offering within the meaning of
Section 4(2) of the Act.
(j) For so long as any of the Securities remain
outstanding, the Company and XCL-China will make available,
upon request, to any seller or prospective purchaser of such
Securities the information specified in Rule 144A(d)(4)
under the Act, unless the Company is then subject to Section
13 or 15(d) of the Exchange Act.
(k) Each of the Company and XCL-China will use its
best efforts to (i) permit the Securities to be designated
PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the
Private Offering, Resales and Trading through Automated
Linkages market (the "PORTAL Market") and (ii) permit the
Securities to be eligible for clearance and settlement
through DTC.
(l) (i) During the period beginning from the date
hereof and continuing until the date 90 days after the
Closing Date, neither the Company nor XCL-China will offer,
sell, contract to sell or otherwise dispose of, except as
provided hereunder, any securities that are substantially
similar to the Securities or the Common Stock, including,
but not limited to, any securities that are convertible into
or exchangeable for, or that represent the right to receive,
Common Stock or any such substantially similar securities,
except that the Company may, without such consent (A) issue
shares of Common Stock upon conversion of preferred stock or
exercise of warrants outstanding on the Closing Date, (B)
issue units consisting of shares of preferred stock and
warrants to purchase Common Stock upon consummation of the
Concurrent Equity Offering and thereafter issue comparable
securities to Xxxxxxx Xxxxxxx valued at $500,000, (C) issue
shares of Common Stock pursuant to options or similar rights
granted to directors, officers or employees, (D) issue
shares of Common Stock pursuant to any long-term incentive
or employee benefit plan of the Company, (E) issue shares of
Common Stock and Preferred Stock in payment of dividends on
Preferred Stock, (F) issue shares of Common Stock in
redemption of Preferred Stock, (G) issue shares of Amended
Series A Preferred Stock in payment of interest on the
Subordinated Debt (as such terms are defined in the Final
Memorandum) and (H) grant options or other derivative
securities pursuant to existing stock option plans of the
Company; and provided, that, the Company shall not offer,
sell, contract to sell or otherwise dispose of securities of
the Company after such 90 day period if such transaction
would cause the initial offer and sale by the Company and
resale by the Initial Purchaser of the Securities not to be
exempt from the registration requirements of the Act, and
(ii) the Company it will use its best efforts to cause each
person who has entered into a Lock-up Agreement (as herein
defined) to comply therewith, will not grant any waivers or
consents to noncompliance therewith and will enforce its
rights under each such agreement, in each case unless and to
the extent that it shall have obtained the Initial
Purchaser's prior written consent.
(m) During the period of two years after the
Closing Date (or such shorter period as may be provided for
in Rule 144(k) under the Act, as the same may be in effect
from time to time), the Company will not, and will not
permit any of its subsidiaries or other affiliates (as
defined in Rule 144A under the Act) controlled by it to,
resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any
of them, except pursuant to an effective registration
statement under the Act.
(n) The Company shall pay all stamp and other
duties, if any, which may be imposed by the United States or
the United Kingdom or any political subdivision thereof or
taxing authority thereof or therein with respect to the
issuance of the Securities; provided, however, the Company
shall not be required to make any payment with respect to
any other tax, assessment or government charge imposed by
any government or any political subdivision thereof or
taxing authority.
6. Expenses. The Company and XCL-China agree, jointly
and severally, to pay all costs and expenses incident to the
performance of their obligations under this Agreement,
whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident
to (i) the printing, word processing or other production of
documents with respect to the transactions contemplated
hereby, including any costs of printing the Preliminary
Memorandum and the Final Memorandum and any amendment or
supplement thereto, (ii) all arrangements relating to the
delivery to the Initial Purchaser of copies of the foregoing
documents, (iii) the fees and disbursements of the counsel,
the accountants and any other experts or advisors retained
by the Company, (iv) preparation, issuance and delivery to
the Initial Purchaser of the Securities, (v) the
qualification of the Securities under state securities and
"Blue Sky" laws, including filing fees and fees and
disbursements of counsel incurred by the Initial Purchaser
relating thereto, (vi) the reasonable fees, disbursements
and charges of Xxxxxx & Xxxxxx L.L.P., counsel to the
Initial Purchaser, incurred in connection with the
transactions contemplated hereby, (vii) expenses in
connection with any meetings with prospective investors in
the Securities, (viii) fees and expenses of the Trustee, the
Disbursement Agent, the Representative, the Warrant Agent
and the transfer agent for the Common Stock including fees
and expenses of their respective counsel incurred by any of
them, (ix) all expenses and listing fees incurred in
connection with the application for quotation of the
Securities on the PORTAL Market and (x) any fees charged by
investment rating agencies for the rating of the Securities.
If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the
Initial Purchaser set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated or because
of any failure, refusal or inability on the part of the
Company or XCL-China to perform all obligations and satisfy
all conditions on their part to be performed or satisfied
hereunder (other than solely by reason of a default by the
Initial Purchaser on its obligations hereunder after all
conditions hereunder have been satisfied in accordance
herewith), the Company and XCL-China, jointly and severally,
agree to promptly reimburse the Initial Purchaser upon
demand for all out-of-pocket expenses (including reasonable
fees, disbursements and charges of Xxxxxx & Xxxxxx L.L.P.,
counsel for the Initial Purchaser) that shall have been
incurred by the Initial Purchaser in connection with the
proposed purchase and sale of the Securities. The Company
and XCL-China shall not be liable to the Initial Purchaser
for loss of contemplated profits from the transactions
covered by this Agreement.
7. Conditions of the Initial Purchaser's Obligations.
The obligation of the Initial Purchaser to purchase and pay
for the Securities shall, in its sole discretion, be subject
to the satisfaction or waiver of the following conditions on
or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser
shall have received the opinion, dated as of the Closing
Date and addressed to the Initial Purchaser, of Xxxxxxxxx
Xxxxxxxx Xxxxx & Xxxxx LLP, counsel for the Company and XCL-
China, in form and substance satisfactory to counsel for the
Initial Purchaser, substantially to the effect that:
(i) Each of the Company and XCL-China is duly
incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Final Memorandum. The Company is duly
qualified as a foreign corporation and is in good standing
under the laws of the State of Louisiana.
(ii) To the knowledge of such counsel, all of
the outstanding shares of capital stock of XCL-China are
owned, directly or indirectly, by the Company, free and
clear of all liens, encumbrances, equities and claims or
restrictions on transferability or voting, except for those
arising under the Participation Agreement or under the
applicable laws, rules or regulations (including
interpretations thereof) of the People's Republic of China
or securing the Existing Secured Debt (as such terms are
defined in the Final Memorandum).
(iii) Except as set forth in the Final
Memorandum, to the knowledge of such counsel (A) no options,
warrants or other rights to purchase from the Company or XCL-
China shares of capital stock in the Company or XCL-China
are outstanding, (B) no agreements or other obligations of
the Company or XCL-China to issue, or other rights to cause
the Company or XCL-China to convert, any obligation into, or
exchange any securities for, shares of capital stock in the
Company or XCL-China are outstanding and (C) no holder of
securities of the Company or XCL-China is entitled to have
such securities registered under a registration statement
filed by the Company or XCL-China under the Act with respect
to the Securities or the Warrant Shares.
(iv) The Senior Notes have been duly and
validly authorized and executed by the Company and, when
delivered by the Company (assuming the due authorization,
execution, and delivery of the Indenture by the Trustee and
the due authentication of the Senior Notes by the Trustee in
accordance with the Indenture) and paid for by the Initial
Purchaser in accordance with the terms of this Agreement,
the Indenture and the Intercreditor Agreement, will
constitute the valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture and the
Intercreditor Agreement and enforceable against the Company
in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any
proceeding therefor may be brought.
(v) The Company has all requisite corporate
power and authority to execute, deliver and perform its
obligations under the Indenture, the Intercreditor Agreement
and the Security Documents; the Indenture is in sufficient
form for qualification under the TIA; the Indenture, the
Intercreditor Agreement and the Security Documents have been
duly and validly authorized, executed and delivered by the
Company and (assuming the due authorization, execution and
delivery thereof by each other party thereto), each
constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with
its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity and the
discretion of the court before which any proceeding therefor
may be brought and (iii), in the case of the Security
Documents, federal or state securities laws or principles of
public policy affecting enforcement of rights to indemnity
or contribution; and, assuming the Disbursement Agent takes
and keep possession of the Collateral on behalf of the
Trustee as contemplated by the Disbursement Agreement and
the Security Agreement and all requisite filings under the
Uniform Commercial Code have been made, all actions have
been taken to create and perfect a security interest and
pledge of the Collateral in favor of the Trustee.
(vi) The Company has all requisite corporate
power and authority to execute, deliver and perform its
obligations under the Registration Rights Agreement; the
Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company and
(assuming the due authorization, execution and delivery
thereof by the Initial Purchaser), constitutes the valid and
legally binding agreement of the Company, enforceable
against the Company in accordance with its terms, except
that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (B)
any rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public
policy considerations.
(vii) Subject to the availability of a
sufficient number of authorized but unissued or treasury
shares to permit the exercise of the outstanding Warrants
and Additional Warrants, the Company has all requisite
corporate power and authority to execute, deliver and
perform its obligations under the Warrant Agreement. The
Warrant Agreement has been duly and validly authorized,
executed and delivered by the Company and, subject to the
availability of a sufficient number of authorized but
unissued or treasury shares to permit the exercise of the
outstanding Warrants and Additional Warrants, constitutes
the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its
terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter
in effect relating to creditors' rights generally, (ii)
general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and
(iii) federal or state securities laws or principles of
public policy affecting enforcement of rights to indemnity
or contribution.
(viii) Subject to the availability of a
sufficient number of authorized but unissued or treasury
shares to permit the exercise of the outstanding Warrants
and Additional Warrants, the Company has all requisite
corporate power and authority to execute, deliver and
perform its obligations under the Warrants and the
Additional Warrants. The Warrants and the Additional
Warrants have been duly and validly authorized and executed
by the Company and, when countersigned by the Warrant Agent
in accordance with the provisions of the Warrant Agreement
and delivered to and paid for (in the case of the Warrants)
by the Initial Purchaser in accordance with the terms of
this Agreement, will have been duly issued and delivered
and, subject to the availability of a sufficient number of
authorized but unissued or treasury shares to permit the
exercise of the outstanding Warrants and Additional
Warrants, will constitute the valid and legally binding
obligations of the Company, entitled to the benefits of the
Warrant Agreement, and enforceable against the Company in
accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) general principles of
equity and the discretion of the court before which any
proceeding therefor may be brought and (iii) federal or
state securities laws or principles of public policy
affecting enforcement of rights to indemnity or
contribution.
(ix) Subject to the availability of a
sufficient number of authorized but unissued or treasury
shares to permit the exercise of the outstanding Warrants
and Additional Warrants, when issued in accordance with the
terms and conditions contained in the Warrant Agreement,
upon exercise of the Warrants and upon exercise of the
Additional Warrants, the Warrant Shares and the Additional
Warrant Shares, respectively, will be duly authorized,
validly issued, fully paid and non-assessable and will not
be subject to any preemptive or similar rights.
(x) Each of the Company and XCL-China has all
requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; the
execution, delivery and performance of this Agreement by the
Company and XCL-China and the consummation by the Company
and XCL-China of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate
action on the part of the Company and XCL-China. This
Agreement has been duly executed and delivered by the
Company and XCL-China.
(xi) The Indenture, the Senior Notes, the
Guarantee (when issued in accordance with the Indenture),
the Intercreditor Agreement, the Security Documents, the
Warrants, the Additional Warrants, the Warrant Shares, the
Common Stock, the Registration Rights Agreement and the
Warrant Agreement conform in all material respects to the
descriptions thereof contained in the Final Memorandum.
(xii) To the knowledge of such counsel, no
legal or governmental proceedings are pending or threatened
to which any of the Company or any of its Subsidiaries is a
party or to which the property or assets of the Company or
any Subsidiary is subject which, if determined adversely to
the Company or the Subsidiary, would result, individually or
in the aggregate, in a Material Adverse Effect, or which
seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Securities
to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum under the
caption "Use of Proceeds."
(xiii) The execution and delivery of the
Exchange Notes and the Private Exchange Notes by the Company
have been duly authorized by all necessary corporate action
of the Company, and when the Exchange Notes and Private
Exchange Notes have been duly executed and delivered by the
Company in accordance with the terms of the Registration
Rights Agreement and the Indenture (and assuming due
authentication by the Trustee), the Exchange Notes and the
Private Exchange Notes will constitute the valid and legally
binding obligations of the Company, entitled to the benefits
of the Indenture and enforceable against the Company in
accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to
creditors' rights generally and, (ii) general principles of
equity and the discretion of the court before which any
proceeding therefor may be brought.
(xiv) The execution and delivery of this
Agreement, the Indenture, the Intercreditor Agreement, the
Security Documents, the Warrant Agreement and the
Registration Rights Agreement and the consummation of the
transactions contemplated hereby and thereby (including,
without limitation, the issuance and sale of the Securities
to the Initial Purchaser) will not conflict with or
constitute or result in a material breach or violation of or
a default under (or an event which with notice or passage
of time or both would constitute a material default under)
(i) to such counsel's knowledge, any of the terms or
provisions of any indenture, mortgage, deed of trust, loan
agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or
instrument (including in any event any of the foregoing
which have been filed by the Company with the Commission) to
which the Company or XCL-China is a party or to which either
of them or their respective properties or assets is subject,
except for any such conflict, breach, violation, default or
event which would not, individually or in the aggregate,
have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws of the Company or the Memorandum and
Articles of Association of XCL-China, or (iii) to such
counsel's knowledge, any statute, judgment, decree, order,
rule or regulation known to such counsel to be applicable to
the Company or XCL-China or any of their respective
properties or assets, except for any securities or antifraud
law.
(xv) To the knowledge of such counsel, no
consent, approval, authorization or order of any domestic
governmental authority is required for the issuance and sale
by the Company and XCL-China of the Securities to the
Initial Purchaser or the other transactions contemplated
hereby, except such as may be required under applicable
securities laws, as to which such counsel need express no
opinion pursuant to this clause (xv), and those which have
previously been obtained.
(xvi) No registration under the Act of the
Securities is required in connection with the sale of the
Securities to the Initial Purchaser as contemplated by this
Agreement and the Final Memorandum or in connection with the
initial resale of the Securities by the Initial Purchaser in
accordance with Section 8 of this Agreement, and prior to
the commencement of the Exchange Offer (as defined in the
Registration Rights Agreement) or the effectiveness of the
Shelf Registration Statement (as defined in the Registration
Rights Agreement), the Indenture is not required to be
qualified under the TIA, in each case assuming (i) that the
Purchasers who buy such Securities in the initial resale
thereof are qualified institutional buyers as defined in
Rule 144A promulgated under the Act ("QIBs" or "Qualified
Institutional Buyers"), accredited investors as defined in
Rule 501(a)(1), (2), (3) or (7) promulgated under the Act
("Accredited Investors"), or foreign Purchaser (as defined
in Section 8), (ii) the accuracy and completeness of the
Initial Purchaser's representations in Section 8 and those
of the Company and XCL-China contained in this Agreement
regarding the offer and sale of the Securities and the
absence of a general solicitation in connection with the
sale of such Securities to the Initial Purchaser and the
initial resale thereof and (iii) the due performance by the
Initial Purchaser of the agreements set forth in Section 8
hereof.
(xvii) Neither the consummation of the
transactions contemplated by this Agreement (including,
without limitation, any pledge of the capital stock of XCL-
China pursuant to the Pledge Agreement) nor the sale,
issuance, execution or delivery of the Securities will
violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System.
At the time the foregoing opinion is delivered,
Xxxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP shall additionally
state that it has participated in conferences with officers
and other representatives of the Company and XCL-China,
representatives of the independent public accountants for
the Company, representatives of the Initial Purchaser and
counsel for the Initial Purchaser, at which conferences the
contents of the Final Memorandum and related matters were
discussed, and, although it has not independently verified
and is not passing upon and assumes no responsibility for
the accuracy, completeness or fairness of the statements
contained in the Final Memorandum (except to the extent
specified in clause (xi)), no facts have come to its
attention which lead it to believe that the Final
Memorandum, on the date thereof or at the Closing Date,
contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light
of the circumstances under which they were made, not
misleading (it being understood that such firm need not
comment with respect to the financial statements and related
notes thereto and the other financial, statistical, reserve
and other geological data (including projections) included
in the Final Memorandum). In rendering such opinion, such
counsel may (i) rely in respect to matters of fact upon the
representations and warranties of the Company and XCL-China
set forth herein, upon certificates of officers of the
Company and its Subsidiaries and upon information obtained
from public officials, (ii) assume that all documents
submitted to such counsel as originals are authentic, that
all copies submitted to such counsel conform to the
originals thereof, and that the signatures on all documents
examined by such counsel are genuine, (iii) state that such
counsel's opinion is limited to the federal law of the
United States and the laws of the State of New York and the
General Corporation Law of the State of Delaware, (iv) rely
in respect to all matters involving XCL-China and the laws
of the British Virgin Islands upon the opinion of local
counsel, and (v) may make such other assumptions and
qualifications as may be reasonably acceptable to the
Initial Purchaser. The opinion of Xxxxxxxxx Xxxxxxxx
Xxxxx & Xxxxx LLP described in this subsection (a) shall be
rendered at the request of the Company and XCL-China to, and
may be relied upon solely by, the Initial Purchaser and
shall so state therein.
References to the Final Memorandum in this subsection
(a) shall include any amendment or supplement thereto
prepared in accordance with the provisions of this Agreement
at the Closing Date.
(b) On the Closing Date, the Initial Purchaser
shall have received the opinion, in form and substance
satisfactory to the Initial Purchaser, dated as of the
Closing Date and addressed to the Initial Purchaser, of
Xxxxxx & Xxxxxx L.L.P., counsel for the Initial Purchaser,
with respect to certain legal matters relating to this
Agreement and such other related matters as the Initial
Purchaser may require. In rendering such opinion, Xxxxxx &
Xxxxxx L.L.P. shall have received and may rely upon such
certificates and other documents and information as it may
reasonably request to pass upon such matters.
(c) The Initial Purchaser shall have received from
the Independent Accountants a comfort letter dated the date
hereof, in form and substance satisfactory to the Initial
Purchaser, to the effect set forth in Exhibit C hereto.
(d) The representatives and warranties of each of
the Company and XCL-China contained in this Agreement shall
be true and correct in all material respects on and as of
the date hereof and on and as of the Closing Date as if made
on and as of the Closing Date (except for the
representations and warranties which were true and correct
as of a certain specified date which shall continue to be
true and correct as of such date); the statements of the
Company's and XCL-China's officers made pursuant to any
certificate delivered in accordance with the provisions
hereof shall be true and correct in all material respects on
and as of the date made and on and as of the Closing Date;
the Company and XCL-China shall have complied in all
material respects with all agreements and satisfied all
conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date; and, except as
described in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof),
subsequent to the date of the most recent financial
statements in such Final Memorandum, there shall have been
no development that, singly or in the aggregate, is
reasonably likely to have a Material Adverse Effect.
(e) The sale of the Securities hereunder shall not
be enjoined (temporarily or permanently) on the Closing
Date.
(f) Subsequent to the date of the most recent
financial statements in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof),
other than as described in such Final Memorandum or
contemplated hereby, neither the Company nor any Subsidiary
shall have incurred any liabilities or obligations, direct
or contingent (other than in the ordinary course of
business), that are material to the Company and its
Subsidiaries, taken as a whole, or entered into any
transactions not in the ordinary course of business that are
material to the business, condition (financial or other) or
results of operations or prospects of the Company, taken as
a whole, and there shall not have been any adverse change in
the capital stock or long-term indebtedness of the Company
or any Subsidiary that is material to the business,
condition (financial or other) or results of operations or
prospects of the Company and the Subsidiaries, taken as a
whole.
(g) Subsequent to the date of the most recent
financial statements in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof),
the conduct of the business and operations of the Company or
XCL-China shall not have been interfered with by strike,
fire, flood, hurricane, accident or other calamity (whether
or not insured) or by any court or governmental action,
order or decree, and, except as otherwise stated therein,
the properties of the Company or XCL-China shall not have
sustained any loss or damage (whether or not insured) as a
result of any such occurrence, except any such interference,
loss or damage which would not, individually or in the
aggregate, have a Material Adverse Effect.
(h) The Initial Purchaser shall have received
certificates of the Company and XCL-China, dated the Closing
Date, signed on behalf of the Company and XCL-China by their
respective Chairman of the Board or President and their
Chief Financial Officer, to the effect that:
(i) the representations and warranties of the
Company and XCL-China contained in this Agreement are true
and correct in all material respects as of the date hereof
and as of the Closing Date (except for the representations
and warranties which were true and correct as of a certain
specified date which shall continue to be true and correct
as of such date), and the Company and XCL-China have
performed all covenants and agreements and satisfied
hereunder all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date;
(ii) at the Closing Date, since the date
hereof or since the date of the most recent financial
statements in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof), no
event or events have occurred, no information has become
known nor does any condition exist that, individually or in
the aggregate, would have a Material Adverse Effect;
(iii) since the date hereof or since the date
of the most recent financial statements in the Final
Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), other than as described in the Final
Memorandum or contemplated hereby, neither the Company nor
any Subsidiary has incurred any liabilities or obligations,
direct or contingent (other than in the ordinary course of
business), that are material to the Company and its
Subsidiaries, taken as a whole, or entered into any
transactions not in the ordinary course of business that are
material to the business, condition (financial or other) or
results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, and there has not been any
change in the capital stock or long-term indebtedness of the
Company or any Subsidiary that is material to the business,
condition (financial or other) or results of operations or
prospects of the Company and its Subsidiaries, taken as a
whole;
(iv) the sale of the Securities hereunder has
not been enjoined (temporarily or permanently; and
(v) the Concurrent Equity Offering shall have
been consummated as contemplated by the Final Memorandum.
(i) On the Closing Date, the Initial Purchaser
shall have received the Registration Rights Agreement
executed by the Company and shall have received the
Additional Warrants executed by the Company.
(j) The Initial Purchaser shall have received from
X.X. Xxxx and Associates, Inc. a letter dated the date
hereof, in form and substance satisfactory to the Initial
Purchaser, to the effect set forth in Exhibit D hereto.
(k) The Concurrent Equity Offering shall have been
consummated as contemplated by the Final Memorandum.
(l) ING (U.S.) Capital Corporation and the holders
of the Company's Secured Subordinated Notes due April 5,
2000 shall have executed and delivered the Intercreditor
Agreement, in form and substance satisfactory to the Initial
Purchaser and its counsel.
(m) The directors and executive officers of the
Company who are holders of outstanding shares of or
securities exercisable or exchangeable for or convertible
into shares of capital stock of the Company and the
principal holders of the Company's Series A, Cumulative
Convertible Preferred Stock shall have entered into a
written agreement with the Initial Purchaser in the form of
Exhibit E hereto (each such agreement a "Lock-up
Agreement"), and executed originals of each Lock-up
Agreement shall have been delivered to you.
On or before the Closing Date, the Initial Purchaser
and counsel for the Initial Purchaser shall have received
such further documents, opinions, certificates, letters and
schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and
XCL-China as they shall have heretofore reasonably requested
from the Company and XCL-China.
All such documents, opinions, certificates, letters,
schedules or instruments delivered pursuant to this
Agreement will comply with the provisions hereof only if
they are reasonably satisfactory in all material respects to
the Initial Purchaser and counsel for the Initial Purchaser.
The Company and XCL-China shall furnish to the Initial
Purchaser such conformed copies of such documents, opinions,
certificates, letters, schedules and instruments in such
quantities as the Initial Purchaser shall reasonably
request.
8. Representations and Warranties by the Initial
Purchaser. The Initial Purchaser represents and warrants
that it has duly authorized, executed and delivered this
Agreement. The Initial Purchaser hereby acknowledges that
the Securities have not been registered under the Act; they
are being offered and sold pursuant to an exemption from
registration contained in the Act based in part on the
Initial Purchaser's representations contained in this
Agreement, including, without limitation, the following: it
has substantial experience in evaluating and investing in
private placement transactions of securities in companies
similar to the Company so that it is capable of evaluating
the merits and risks of its investment in the Company; it
acknowledges that it must bear the economic risk of this
investment indefinitely unless the Securities are registered
under the Act or an exemption from registration is
available; it is an "accredited investor" within the meaning
of Rule 501(a) promulgated under the Act; it has received
and read the Final Memorandum, in particular the
information set forth in the sections entitled "Disclosure
of Forward-Looking Information," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Transfer Restrictions" and
"Private Placement," and has had an opportunity to discuss
the Company's business, management and financial affairs
with directors, officers and other management of the Company
and its subsidiaries and ask questions of, and receive
answers from, the Company and its management regarding the
terms and conditions of its investment in the Company. The
Initial Purchaser represents and warrants that it is a QIB.
The Initial Purchaser agrees with the Company and XCL-China
that (a) it has not and will not solicit offers for, or
offer or sell, the Securities by any form of general
solicitation or general advertising (as those terms are used
in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the
Act and the rules and regulations promulgated thereunder,
and (b) it has and will solicit offers for the Securities
only from, and will offer the Securities only to (A) in the
case of offers inside the United States, (i) persons whom
the Initial Purchaser reasonably believes to be QIBs, if any
such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only
when such person has represented to the Initial Purchaser
that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance
on Rule 144A under the Act, and, in each case, in
transactions under Rule 144A or (ii) a limited number of
other institutional investors reasonably believed by the
Initial Purchaser to be Accredited Investors that, prior to
their purchase of the Securities, deliver to the Initial
Purchaser a letter containing the representations and
agreements set forth in Appendix A to the Final Memorandum
and (B) in the case of offers outside the United States,
persons other than U.S. persons ("foreign purchaser"), which
term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for
foreign beneficial owners (other than an estate or trust));
provided, however, that, in the case of this clause (b), in
purchasing such Securities, such persons are deemed to have
represented and agreed as provided under the caption
"Transfer Restrictions" contained in the Final Memorandum.
The Initial Purchaser acknowledges and agrees that, except
as permitted by this Agreement, it will not offer, sell or
deliver any Securities (i) as part of the distribution at
any time or (ii) otherwise until 40 days (or such longer
period as may be provided under Regulation S, as amended)
after the later of the commencement of the offering of the
Units and the last original issue date of the Units, within
the United States or to, or for the account or benefit of,
U.S. Persons, and that it will send to each dealer to which
it sells Units in reliance on Regulation S during the
restricted period a confirmation or other notice setting
forth the restrictions on offers and sales of the Securities
within the United States or to, or for the account or
benefit of, U.S. Persons (terms used in this paragraph
having the meanings given to them by Regulation S under the
Securities Act). The Initial Purchaser further represents,
warrants and agrees that (i) it has not offered or sold and
prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons
in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to
the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995, (ii) it has
complied, and will comply, with all applicable provisions of
the Financial Services Act 1986 of Great Britain with
respect to anything done by it in relation to the Securities
in, from or otherwise involving the United Kingdom, and
(iii) it has only issued or passed on, and will only issue
or pass on, in the United Kingdom, any document received by
it in connection with the issuance of the Securities to a
person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 of Great Britain or is a person to
whom the document may otherwise lawfully be issued or passed
on. The Initial Purchaser agrees that it will not offer,
sell or deliver any of the Securities in any jurisdiction
outside the United States, its territories and possessions
except under circumstances that will result in compliance
with the provisions of Regulation S promulgated under the
Act and the applicable laws of such jurisdiction, and that
it will take at its own risk and expense whatever action is
required to permit its purchase and resale of the Securities
in such jurisdictions. The Initial Purchaser understands
that no action has been taken to permit a public offering of
the Securities in any jurisdiction within or without the
United States where action would be required for such
purpose. The Initial Purchaser agrees not to cause any
advertisement of the Securities to be published in any
newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except
in any such case with the consent of the Company. The
Initial Purchaser agrees to send and give a copy of the
Final Memorandum (as the same may be supplemented or
amended) to each Purchaser of the Units at or prior to the
written confirmation of the sale of the Units to such
person.
9. Indemnification and Contribution. (a) The
Company and XCL-China, jointly and severally, agree to
indemnify and hold harmless the Initial Purchaser, and each
person, if any, who controls the Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the
Exchange Act of 1934, as amended (the "Exchange Act"),
against any losses, claims, damages or liabilities to which
the Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise,
insofar as any such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based
upon:
(i) any untrue statement or alleged untrue
statement of any material fact contained in any
Memorandum or any amendment or supplement thereto;
(ii) the omission or alleged omission to
state, in any Memorandum or any amendment or supplement
thereto, a material fact required to be stated therein
or necessary to make the statements therein not
misleading; or
(iii) any breach by the Company or XCL-China
of their respective representations, warranties and
agreements set forth herein;
and, subject to the provisos hereto, will reimburse, as
incurred, the Initial Purchaser and each such controlling
person for any legal or other expenses incurred by the
Initial Purchaser or such controlling person in connection
with investigating, defending against or appearing as a
third-party witness in connection with any such loss, claim,
damage, liability or action in respect thereof; provided,
however, the Company and XCL-China will not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged
omission made in any Memorandum or any amendment or
supplement thereto in reliance upon and in conformity with
written information concerning the Initial Purchaser
furnished to the Company or XCL-China by the Initial
Purchaser specifically for use therein. This indemnity
agreement will be in addition to any liability that the
Company or XCL-China may otherwise have to the indemnified
parties. Neither the Company nor XCL-China shall be liable
under this Section 9 for any settlement of any claim or
action effected without its prior written consent, which
shall not be unreasonably withheld; and provided further,
however, that this indemnity, as to the Preliminary
Memorandum, shall not inure to the benefit of the Initial
Purchaser (or any person controlling such Initial Purchaser)
on account of any loss, claim, damage or liability arising
from the sale of Securities to any person by such Initial
Purchaser if such Initial Purchaser failed to send or give a
copy of the Final Memorandum (as the same may be
supplemented or amended) to such person at or prior to the
written confirmation of the sale of the Securities to such
person, and the untrue statement or alleged untrue statement
or omission or alleged omission of a material fact in such
Preliminary Memorandum was corrected in the Final
Memorandum, unless such failure resulted from noncompliance
by the Company with Section 5(d).
(b) The Initial Purchaser agrees to indemnify and
hold harmless each of the Company, XCL-China, their
directors, their officers and each person, if any, who
controls the Company or XCL-China within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which
the Company or XCL-China or any such director, officer or
controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any
Memorandum or any amendment or supplement thereto, (ii) the
omission or the alleged omission to state therein a material
fact required to be stated in any Memorandum or any
amendment or supplement thereto or necessary to make the
statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written
information concerning such Initial Purchaser, furnished to
the Company or XCL-China by the Initial Purchaser
specifically for use therein or (iii) any breach by the
Initial Purchaser of its representations, warranties and
agreements set forth herein; and subject to the limitation
set forth immediately preceding this clause, will reimburse,
as incurred, any legal or other expenses incurred by the
Company or XCL-China or any such director, officer or
controlling person in connection with investigating or
defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be
in addition to any liability that the Initial Purchaser may
otherwise have to the indemnified parties. The Initial
Purchaser shall not be liable under this Section 9 for any
settlement of any claim or action effected without its prior
written consent, which shall not be unreasonably withheld.
Neither the Company nor XCL-China shall, without the prior
written consent of the Initial Purchaser, effect any
settlement or compromise of any pending or threatened
proceeding in respect of which the Initial Purchaser is or
could have been a party, or indemnity could have been sought
hereunder by the Initial Purchaser, unless such settlement
(A) includes an unconditional written release of the Initial
Purchaser, in form and substance reasonably satisfactory to
the Initial Purchaser, from all liability on claims that are
the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault,
culpability or failure to act by or on behalf of the Initial
Purchaser.
(c) Promptly after receipt by an indemnified party
under this Section 9 of notice of the commencement of any
action for which such indemnified party is entitled to
indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against
the indemnifying party under this Section 9, notify the
indemnifying party of the commencement thereof in writing;
but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a)
or (b) above unless and to the extent such failure results
in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve
the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation
provided in paragraphs (a) and (b) above. In case any such
action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that if (i) the
use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action
include both the indemnified party and the indemnifying
party and the indemnified party shall have been advised by
counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are
different from or additional to those available to the
indemnifying party, or (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of
notice of the institution of such action, then, in each such
case, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9
for any legal or other expenses, other than reasonable costs
of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection
with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but
substantially similar actions in the same jurisdiction
arising out of the same general allegations or
circumstances, designated by the Initial Purchaser in the
case of paragraph (a) of this Section 9 or the Company or
XCL-China in the case of paragraph (b) of this Section 9,
representing the indemnified parties under such paragraph
(a) or paragraph (b), as the case may be, who are parties to
such action or actions) or (ii) the indemnifying party has
authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable
for the costs and expenses of any settlement of such action
effected by such indemnified party without the prior written
consent of the indemnifying party (which consent shall not
be unreasonably withheld), unless such indemnified party
waived in writing its rights under this Section 9, in which
case the indemnified party may effect such a settlement
without such consent.
(d) In circumstances in which the indemnity
agreement provided for in the preceding paragraphs of this
Section 9 is unavailable to, or insufficient to hold
harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect
thereof), each indemnifying party, in order to provide for
just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions
in respect thereof) in such proportion as is appropriate to
reflect (i) the relative benefits received by the
indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the
Securities or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the
statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities
(or actions in respect thereof). The relative benefits
received by the Company and XCL-China on the one hand and
the Initial Purchaser on the other shall be deemed to be in
the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company bear to
the total discounts and commissions received by such Initial
Purchaser. The relative fault of the parties shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact
relates to information supplied by the Company or XCL-China
on the one hand, or such Initial Purchaser on the other, the
parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The Company, XCL-China and the Initial
Purchaser agree that it would not be equitable if the amount
of such contribution were determined by pro rata or per
capita allocation or by any other method of allocation that
does not take into account the equitable considerations
referred to in the first sentence of the immediately
preceding paragraph (d). Notwithstanding any other
provision of the immediately preceding paragraph (d), the
Initial Purchaser shall not be obligated to make
contributions hereunder that in the aggregate exceed the
total discounts, commissions and other compensation received
by such Initial Purchaser under this Agreement, less the
aggregate amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of the untrue
or alleged untrue statements or the omissions or alleged
omissions to state a material fact, and no person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation. For purposes of the immediately
preceding paragraph (d), each person, if any, who controls
the Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the
same rights to contribution as the Initial Purchaser, and
each director of the Company and XCL-China, each officer of
the Company and XCL-China and each person, if any, who
controls the Company and XCL-China within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company
and XCL-China.
10. Survival Clause. The respective
representations, warranties, agreements, covenants,
indemnities and other statements of the Company and XCL-
China, their respective officers and the Initial Purchaser
set forth in this Agreement or made by or on behalf of them
pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on
behalf of the Company and XCL-China, any of their respective
officers or directors, the Initial Purchaser or any
controlling person referred to in Section 9 hereof and (ii)
delivery of and payment for the Securities. The respective
agreements, covenants, indemnities and other statements set
forth in Sections 6, 9 and 16 hereof shall remain in full
force and effect, regardless of any termination or
cancellation of this Agreement.
11. Termination. (a) This Agreement may be
terminated in the sole discretion of the Initial Purchaser
by notice to the Company given prior to the Closing Date in
the event that the Company or XCL-China shall have failed,
refused or been unable to perform all obligations and
satisfy all conditions on their respective part to be
performed or satisfied hereunder at or prior thereto or, if
at or prior to the Closing Date:
(i) either the Company or XCL-China shall have
sustained any loss or interference with respect to its
businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down
or work stoppage or any legal or governmental
proceeding, which loss or interference, in the sole
judgment of the Initial Purchaser, has had or has a
Material Adverse Effect, or there shall have been, in
the sole judgment of the Initial Purchaser, any
Material Adverse Change, or any event or development
involving or reasonably likely to cause or result in a
Material Adverse Effect (including without limitation a
change in management or control of the Company or XCL-
China), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement
thereto);
(ii) trading in securities of the Company or
in securities generally on the New York Stock Exchange,
American Stock Exchange or the NASDAQ National Market
shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or
market;
(iii) a banking moratorium shall have been
declared by New York or United States authorities;
(iv) there shall have been (A) an outbreak or
escalation of hostilities between the United States and
any foreign power, or (B) an outbreak or escalation of
any other insurrection or armed conflict involving the
United States or any other national or international
calamity or emergency, or (C) any material change in
the financial markets of the United States which, in
the case of clause (A), (B) or (C) and in the sole
judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the
private offering or the delivery of the Securities as
contemplated by the Final Memorandum; or
(v) any securities of the Company shall have
been downgraded or placed on any "watch list" for
possible downgrading by any nationally recognized
statistical rating organization.
(b) Termination of this Agreement pursuant to this
Section 11 shall be without liability of any party to any
other party except as provided in Section 10 hereof.
12. Information Supplied by the Initial Purchaser.
The statements set forth in the last paragraph on the front
cover page, the first paragraph on page 3, and in the third,
fourth, ninth, thirteenth, fifteenth and sixteenth
paragraphs under the heading "Private Placement" in the
Memorandum (to the extent such statements relate to the
Initial Purchaser) constitute the only information furnished
by the Initial Purchaser to the Company or XCL-China for the
purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be
in writing and, if sent to the Initial Purchaser, shall be
mailed or delivered or telecopied and confirmed in writing
to (i) Xxxxxxxxx & Company, Inc., 000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx,
Telecopy No. (000) 000-0000; and if sent to the Company or
XCL-China, shall be mailed or delivered or telecopied and
confirmed in writing to it at 000 Xxx Xxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, Attention: General Counsel,
Telecopy No. (000) 000-0000; with a copy to Xxxxxxxxx
Xxxxxxxx Xxxxx & Xxxxx LLP, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxxxxx, Esq.,
Telecopy No. (000) 000-0000.
All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally
delivered; five business days after being deposited in the
United States mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier;
and when receipt is acknowledged by the addressee, if
telecopied.
14. Successors. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchaser, the
Company and XCL-China and their respective successors and
legal representatives, and nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the
benefit of no other person except that (i) the indemnities
of the Company and XCL-China contained in Section 9 of this
Agreement shall also be for the benefit of any person or
persons who control the Initial Purchaser within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Initial Purchaser contained
in Section 9 of this Agreement shall also be for the benefit
of the directors of the Company and XCL-China, their
respective officers and any person or persons who control
the Company or XCL-China within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of
Securities from the Initial Purchaser will be deemed a
successor because of such purchase.
15. Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
16. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one
and the same instrument.
If the foregoing correctly sets forth our
understanding, please indicate your acceptance thereof in
the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among the
Company, XCL-China and the Initial Purchaser.
Very truly yours,
XCL LTD.
By:_____________________________
Xxxxx X. Xxxxxx
Executive Vice President,
General Counsel and
Secretary
XCL-CHINA LTD.
By:_____________________________
Xxxxx X. Xxxxxx
Vice President and
Secretary
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
XXXXXXXXX & COMPANY, INC.
By:_________________________________
Xxxxxx X. Xxxxxxxxx
Senior Vice President
